Bitcoin price: What is Bitcoin lightning network - how could it cause CHAOS with BTC price

BITCOIN prices rose marginally again today, as prices stabilise from an abysmal week. Bitcoin is the highest value cryptocurrency on the market, but prices could be plunged into chaos thanks to the bitcoin lightning network. What is the BTC lightning network?

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What is bitcoin lightning network?

The Lightning Network, first proposed by Thaddeus Dryja and Joseph Poon in a 2015 white paper, creates a layer on top of the bitcoin blockchain, where transactions can be passed back and forth before being added to the underlying blockchain.

In simpler terms, it allows users to transfer money infinitely between two people without registering on the digital ledger, allowing for fast, secure constant payments before the transactions are placed on the blockchain ledger all at once.

When sending a Lightning payment, two parties deposit the funds at one bitcoin address, a so-called "channel," in which they can exchange funds a limitless number of times.

Bitcoin traders enjoy using the Lightning Network due to its preservation of bitcoin’s gold-like features, leaving the block-size limit unchanged but allowing a far greater number of payments to take place.

The concept has been backed by bitcoin evangelist Jack Dorsey, the founder of micro-blogging site Twitter and U.S. payments processor Square.

The question of block size has previously ripped apart the bitcoin community, resulting in a hard fork last year and the creation of bitcoin cash, which can support a current block size of 32 megabytes, compared to bitcoin's one megabyte.

The block size determines how many transactions can be confirmed when each new block is mined and added to the chain.

Bitcoin is one of the slowest processing coins on the market, with many traders turning away from the cryptocurrency for faster, more agile tokens.

Bitcoin price: What is Bitcoin lightning network and how could it cause CHAOS with BTC price (Image: GETTY)

Bitcoin prices are in flux again today (Image: CoinMarketCap)

This means that transaction fees are applied, which can rocket up to $50 per transaction.

Though transaction prices have since fallen back, as adoption grows it's feared fees will increase with them.

Should the lightning network be adopted more broadly throughout the market, itcauseabsolute chaos to BTC prices.

Bitcoin prices have dropped significantly from its peak in 2017, but a spike in transactions could drive up the hype and force the value of bitcoin to new heights.

Garrick Hileman, head of research atBlockchain.comand co-founder ofMosaic.io, a platform for market intelligence on cryptocurrencies, said: “If overall transaction levels remain constant but shift to the Lightning Network, then this should result in reduced mining fees.

“Indeed, many miners in the bitcoin scaling debate opposed the introduction of the SegWit upgrade (which paved the way for Lightning) due to concerns over the reduction in mining fess that would result from transactions moving to Lightning."

Should more traders use bitcoin’s lightning network, who knows what prices we wouldsee.